India has emerged as a significant player in the global Web3 ecosystem, particularly in software development, gaming, investments, and startup funding, exhibiting robust growth year-on-year. This development has transpired even in the absence of locally tailored crypto regulations.
Recent data from the “India Web3 Landscape Report 2024” by Hashed Emergent reveals that India’s share of global Web3 developers has impressively increased from 5% to 12% over the past decade, making it the second largest contributor after the United States.
Developer growth in India since 2015. Source: Hashed Emergent
Tak Lee, CEO and Managing Partner at Hashed Emergent, identifies four key factors propelling India to the forefront of global crypto adoption: retail crypto transactions on centralized services, the highest trading volumes, institutional adoption, and retail DeFi transactions.
Gen Z Dominates the Web3 Developer Landscape in India
Driving this remarkable growth is the younger generation, with approximately 80% of all blockchain developers in India being between the ages of 18 and 27. These developers, particularly those working in DeFi, Payments, AI, and SocialFi, have shown a preference for using the Solana blockchain.
Emerging layer-1 and layer-2 ecosystems such as Ton, Aptos, and Base are gaining popularity across various sectors, signifying a dynamic shift in the Indian Web3 landscape.
Web3 sector and ecosystem trends in India. Source: Hashed Emergent
While numerous funding opportunities and builder initiatives, such as hackathons, have catalyzed initial growth, developers have voiced concerns regarding employers’ reluctance to offer salaries commensurate with global industry standards.
On the other hand, the challenges facing Web3 gaming projects include exorbitant customer acquisition costs and the need to enhance gameplay quality beyond mere financial incentives. As explained by Lee, several games are refocusing their strategies towards ensuring high-quality gaming experiences before integrating blockchain elements.
In a positive shift, Web3 investments in India saw a remarkable 224% increase in 2024 compared to the previous year, sourced from local funds, ecosystem funds, and corporate venture arms of leading exchanges.
Lee notes that the lack of traditional venture capital options has prompted Indian entrepreneurs to explore crowdfunding as a means to secure future growth, with only a select few prominent projects successfully raising funds directly from retail investors.
Funding in India’s Web3 finance sector. Source: Hashed Emergent
The substantial investment growth in India’s Web3 sector in 2024 signifies a steady recovery, particularly with investors keen on emerging areas within decentralized finance.
Currently, India stands as a global hub for founders and developers, boasting the second-largest developer market and the third-largest founder base globally.
However, prevailing barriers to large-scale investments include the slower-than-expected progress of some startups and unclear regulatory frameworks, which inhibit Web3 investment potential.
Growing Web3 Against All Odds
Despite operating in a high-tax environment surrounding cryptocurrency, small-scale crypto investments have increased across India. Many traders prefer making small, frequent trades, with 96% maintaining positions of less than $12 and leveraging between 11x to 20x. The presence of female traders, comprising 1 in 10 futures traders, points to the potential for increased participation within this demographic.
To foster a better investment climate, the report advocates for reforms in crypto tax deductions, enhanced federal guidance on tax implications, and a regulatory framework ensuring that the Web3 sector can flourish.
“India must overcome its negative policy perception that stifles innovation and focus on addressing pain points with effective regulations that will encourage the Web3 sector to thrive.”
Indian Web3 firms call for progressive regulation for all stakeholders. Source: Hashed Emergent
Key regulatory changes suggested by the Indian Web3 community include a solid regulatory framework for virtual asset service providers (VASP), tax rationalization, improved access to banking and payments for Web3 companies, exemptions from VASP regulations, and clear guidelines on existing regulations.
Moreover, recent regulatory measures like URL blocking of locally unlicensed crypto exchanges are leading to an increased reliance on self-custodial and domestic exchanges, which align with Indian law.
